Tom Lee just *CANCELLED* The September Correction

You guys are not going to believe this. Tom Lee just flip-flopped yet again. He is no longer calling for a September correction. He says that could actually happen in the month of October. And if big if we don't get a rate hike from the Fed, stocks are going to rally. In this video, I will share with you the seven minutee long clip from Tom Lee today, his thoughts around the markets, but then we'll talk about my thoughts about this, share some very historical data that I think you need to know. In fact, I think Friday's jobs report is very important. The Fed has never once hiked rates after two consecutive negative jobs reports. Last month's jobs report was negative. If Friday's jobs report is also negative, you can make an argument that the Fed is not going to hike rates. And did you know some of your best months during a midterm election year were in September? Also, some of your worst months during midterm election years have also been in the month of September. Kind of crazy data I'm going to share with you as well. Ladies and gentlemen, I want to start this clip off with what Tom Lee said here. Do me a quick favor though before we begin. Hit that like button for the YouTube algorithm to help push this video out to more people that need to see it because they will make money from it. Keep in mind, my opinions are my opinions. I'm not a financial adviser. This is not a recommendation or a solicitation to buy, sell, or trade anything. And always contact financial adviser before moving money around in your portfolio. Take a listen to what Tom Lee just said. >> And his hair uh and you got it cut. It It looks We were talking about it high and tight. You decided to go with that, right? Yeah. It's good. Good that you did. He's head of re research at Fundstrat and chief investment officer Fundstrat Capital as well as a CNBC contributor. We we won't have to deal with uh where people focus on that on Twitter instead of uh instead of your calls. So that we got that going for us. Tom, August you want you thought would be very good and it was good, but it's not 8,000 on the S&P. It's not 7,800. Then September, you thought there might be a convergence of the worries that that have been keeping everyone else bearish for the while you've been bullish. You think that you thought they were going to come home to roost in September and maybe have a 10% pullback. >> Yeah, that that is what I'm sort of thinking as a base case, you know, because there's a lot of crossurrens this month. Um like Joe Leavia talking about a Fed hike in September. uh the AI data center backlash and there's the seasonality issue. You know, September's a weak month, but I'm actually now thinking because of all this mounting concern, the market might surprise us to the upsides. And I think maybe September 15th, the Fed meeting is the pivot point. If the Fed doesn't cut um doesn't hike, which is our base case, I think actually the markets could rally very strong. It wouldn't be one of those situations where the credibility is is at issue and that the market actually wants a hike. The market never wants a hike, do they? >> That's right. I I think I agree with your statement earlier this morning that uh he wants to signal um credibility, but he wants the data to kind of play out. And if the data, we have the jobs report Friday and we have a CPI report in earlier in September. I I think if both are weaker, I think, you know, the market's not going to price a hike. >> This would be then sort of u revising your call for a pretty big pretty substantial correction this year then would or are you now saying October or November when it comes? Yeah, maybe it gets pushed into October because, you know, I think the consensus view is that midterms are going to be a launch point for stocks to go higher, but maybe that's maybe October, which is normally the month of u big moves, you know, could actually be a weak month instead. >> Would it but it could be from above 8,000 then? >> Yeah. Yeah. Maybe above 8,000. So where then the lows could be not that different from where we were a couple months ago then? >> Yeah, maybe 73 74 something like that >> which we could probably uh handle without that that we could handle without really giving that much back but it would certainly instill a lot of fear and and loathing and and everything else from from people who think now we're going down to 6,000 or or whatever or even worse. >> Yeah, I agree. I mean, every time the market's flat for the week, people start to think it's a bare market starting, you know. So, I think people flip bearish very easily. >> They're ready for that. Uh I I know. What about um crypto in in Bitcoin? That that was weird, wasn't it? What What did you attribute the move to the meeting with executives in in the White House or or it was just ready? >> Yeah. I mean I think the way we would look at it is one I think this year crypto fundamentals have been good because we know the tokenization movements very strong. I mean Robin Hood was a breakout product launch. I mean really one of the biggest hits and Aentic AI is good for crypto but we were in the middle of that crypto winter. I do think catalysts have come together uh and actually gonna really strengthen into year end because one uh crypto is the best performing macro asset in the third quarter so far. So I think September and the fourth quarter there's going to be institutional allocation to crypto. The second is you know the crypto four-year cycle basically ends next month. So I think people who've turned off crypto on their screens are going to come back. the Korean investor, which was really big in crypto. You know, they rotated into AI early this year, but we're already seeing volumes pick up in Korea, so they're rotating back into crypto. And the final is if Clarity Act passes, which could happen this year. And if it does, I think, you know, Bitcoin and Ethereum have a huge fourth quarter. >> So, is crypto win or over and the huge third and fourth quarter, does it make up for what we've seen over the last year and declines in Bitcoin? Yeah, I I think uh it's been a very shallow crypto winner. Um but there was a massive amount of deleveraging like October was a big step down and then earlier this year twice. So I I think very few people own crypto. That's why I think you know Bitcoin could easily you know be in the six figures maybe. >> You get the rate hike. What happens >> on the crypto side? >> I mean it's going to be a good test. Um, but we already know that the long end has risen. So, if we get a hike and long yields fall, that's actually monetary easing. So, it it may have to do with how long-term yields act react to a Fed hike. >> You actually said there would going to be a a jump in crypto. I think it was last time you I mean, you is this what you were talking about or even more that up to 90,000? I can't remember what you said, but you thought it was going to >> Yeah. >> take off. I think this is the beginning. >> Yeah. I think it's the first leg up because this was like a catching people off sides move in crypto. >> Yeah. >> Um I I think institutional investors are buying crypto stocks. That's really evident. Like the volumes have really jumped and that's a sign that they're betting on a big fourth quarter. And I mean, you've had I think you you were at 150 at one point on on Bitcoin. You you haven't abandon those types of numbers or or even I don't know higher than that even. >> I I think 150 is still possible. Um >> like not that far off. >> Yeah. And I think that that's because the S&P also has a lot of upside into year end. You know, the 8,200 I think is still a low number. what the S&P could achieve by the end of the year given how much earnings have revised higher. You know, we're originally thinking 2027 would be 350. Now it's 415, but it could be 425 for next year earnings. >> It matched what we did this quarter, but people were at 18%, it was 30%. Was it? >> Yeah, that's right. And it's still more almost 20% organic, you know, without investment gains. >> What what is the base level right now of GDP growth in in your view? because we had, you know, the import the the import u the surge kind of masked the underlying growth rate giving, you know, Democrats and others plenty of grist that we're at one and a half, you know, we hear we're at one and a half%. What do you think we really are with corporate earnings that the way what we're seeing? The structural GDP looks a lot stronger than the last 20 years because we're in a positive investment cycle plus there's onshoring and then there is this sort of energy infrastructure. >> What is that 3%. >> Yeah, I think it's above three. >> You think it's above three? >> Yeah. But it doesn't have to be inflationary because wages would be sort of the inflation component and wages aren't that strong. >> I'll be damned. I know a lot of you guys are not going to be shocked at all there. Tom Lee just flip-flopped. He said, "Yeah, we might not get a September correction after all. That September could shape up to be a really good month for the stock market." Okay, so first things first, I want to share with you guys some of the historical uh statistics around this. Anna Wong on X, chief US economist, Bloomberg LP economics, former Fed, CEA, US Treasury, PhD blah blah blah UC Berkeley. Okay. very uh prominent figure in the investment world said quote I think next week's payroll's print will disappoint and has decent though not our baseline chance of being negative suppose it is a negative print there is no modern Fed era precedent of the Fed hiking after two negative payroll prints current probability of a Fed rate hike also climbed today as well following a surge of bond yields globally part of this has to do with the yen carry trade I will talk about in this video as Well, but part of it just has to do with people kind of putting on their hedges. You know, nobody wants to be long right now in the bond market. I will show you that in a second as well, which does raise the odds that you could get a violent decline of bond yields as well on any uh economic data or good news that could be coming. The current probability right now is 66.4% chance of a rate hike September 16th. 33.6% 6% chance of a hold. As Tom Lee said, if we get a rate hike, you might actually see bond yields come down, but the markets are likely not going to like a rate hike. So, if we get a rate hike, that's not going to be good. The fact of the matter is though, the Fed has basically always done what the markets are pricing in. So, this time is going to be a little bit different because there's the possibility the Fed would not listen to what the markets are pricing in, and that could be a big surprise. But really like logically coming this Friday, the next CPI report next week that those are going to be more or less the final moves to determine whether or not we're actually going to get a rate hike. Now, I will also tell you the Iran war is a big part of this. The Iran war is helping to prop up bond yields globally, especially in the US. It's keeping oil elevated, which is affecting inflation. If the Iran war were to end or the straight of vermoose were to open, I think there's really a 0% chance of getting a rate hike at that point. So, I don't know if the war with Iran is going to end between now and September 16th. But what I'm saying is basically no matter what happens between now and September 16th. If the Iran war comes to an end, that's bullish as hell. Stocks are going to have a great September. You're not going to get a rate hike. If the Iran war does not end and we continues how we are right now, then the economic data, that's going to be the most important thing here. This is 10-year notes and how Wall Street is positioned. So, you can see hedge fund, speculators, leverage funds, and dealers, they are all short the bonds, right? Basically, everyone's short, nobody's long. Now, what does this actually mean? Because I know when you're talking about bonds and being short and being long, it gets a little confusing. Let me explain it. When 10-year Treasury yields go up, bond prices fall. So investors, they go out, they buy the bonds or they short the bonds, right? When a lot of people go out and short the bonds, bond prices fall, bond yields go up. So there's an inverse relationship and that's the tricky part here, right? So if everyone is short bonds right now and prices continue to fall, yes, bond yields are going up. But if we do get good news, if the Iran war did end or if there was some kind of larger intervention by the Treasury or if the data disappointed and we don't get a rate hike, anything like that, there's a lot of people that could be off sides here in the bond market and well could spur kind of like a mini short squeeze in the bonds because everyone's short. Okay, if there were to be something that changes, everyone a lot of people would cover on those positions, buy the bonds and bond yields would fall. So, usually when there's so many bears in an asset, you are vulnerable for things to go the opposite direction. And this image actually says, quote, "Fuel for a short covering rally." I didn't even read that before I talked about a short squeeze, but yeah, if there is abrupt good news, there would likely be a bit of a short squeeze in bonds, bond prices. So, bond prices would go up and bond yields would come down. So, if you ever hear a short squeeze in bonds, it's not actually the yield, it's the price. I know, complicated, but hopefully that provided some color. Now, I do want to share this uh statistical data as well with you. Um two two pieces here, the good and the bad side. We're going to start with the bad side and then we'll talk about my expectations for the markets right now. Midterm rally or postmidterm rally, all of that. So, Ryan Dietrich, somebody you guys should follow on X Carson Research, they put out a ton of great information, historical precedents, right? Ryan Dietrich here says the worst three and four of the worst five returns ever for September took place in a midterm election year. You can see here down 12 almost 12% down 11% down 9.3% and down 8 1.5%. Yeah, that sounds pretty bad. But the four best September returns ever all took place in a midterm election year. Five of the top seven, huh? Here you have an 8.8% return, 8.3%, 6.2%, 5.6%, and 4.8%. So, long story short, September during a midterm election year can be volatile on both sides. And I think that's the point, right? Right now, we are in a very tricky moment. The tail risks have really increased a lot on both sides of this market. So, what's a tail risk? I just want to run through this just so you guys know. You're looking at a bell curve here, right? This is a normal bell curve of of probabilities, right? So, at this side, you might have the really bearish consequence, right? We'll just put a B. I know I'm I'm bad with this. Over here would be really bullish, right? Put a bull there. Well, in the middle is likely where you're going to tend to fall, right? The the more you get closer to the extreme events on both sides, the bigger the positive or negative input you it will have for the markets, right? So that's a normal kind of bell curve. Normally you don't get big surprises, monumental surprises on either side. But right now with all of the things going on, you have massive risks out there. Let me put it to you like this. Just with the Iran war alone, now that you have economic D-Day going on, the risk is not kinetic conflict, who cares? Markets don't care about who's bombing who. The straight of moose is not opening until it's done, right? The risk would be Scott Besson today talked about sanctioning China. If that happens, China's going to retaliate and we're going to be up Shit's creek quickly in the markets. That is a tail risk event. That has gotten more likely now than it was two weeks ago. Okay. Vice versa, it looks like Iran, at least some people in Iran, want to end the war, which is a positive tail risk that has also gotten more likely, right? economic D-Day. It's supposed to bring Iran to the table to end the war. Both of these things happening, whether the Iran war ended tomorrow or if we get into another trade war or sanction war with China, one's really good, one's really bad. I don't know what's going to happen over the next two weeks, right? So, you could have a big move in September, and I know this doesn't help anyone at all. That's really good or really bad. Now I will just tell you we've kind of been leaning towards you know solving this Iranian conflict. There's been a lot of news over the past month or so that is indications of that. Even what Scott Besson said today that you know Trump is not certain that Iran wants to come to a deal but Iran wants to come to a deal right there's a lot of moving parts there. I mean Iran's president their foreign minister they've all said look we should end the war. Iran's president said today that they're open for dialogue. So, you could get good news there any moment. If we did get good news on the Iran war between now and September 16th, stocks are going to rip. Now, you probably only have another week or so before the markets are really going to start getting scared about a Fed hike. Assuming we have a good jobs report on Friday, I don't know what the jobs report is going to look like. It's probably going to be negative. If that's the case, you're g you're going to alleviate some of the Fed hike concerns, but we have CPI the following week. So even if the jobs report is negative, but CPI is on the hot side, you're probably still going to be pricing in a rate hike at that point. So again, the point here is there's a lot of moving parts. I don't think you want to make big high conviction bets right now at all. Like you want to stay invested this market. I'm staying long this market. I'm full I'm basically fully invested and our portfolio in the trading community is up almost 100% year to date. Well, technically now 97.5% year to date. The best performing hedge fund is up 72% year to date. Probably less than that at this point. We are smoking everyone on Wall Street. But I say this because look, I have big gains right now. I'm not rushing to sell everything and get out the markets. I'm also not super hedging my portfolio either because like maybe a little bit of hedging could make sense right now, but there could be a violent move to the upside or downside at any moment. You definitely don't want to be making big leverage bets on one outcome here in the next couple of weeks. The name of the game is stay alive. Stay alive at least until the midterms are over with. things should really start to calm down by October, midocctober, heading into the midterms. And then after the midterms, there's going to be a lot of hedging, event risk hedging, as I call it, that gets taken off the markets. It's going to cause a bit of a short squeeze for one reason or another. You tend to rally for about 9 to 10 months after the midterms. I don't make the rules. I play the game. This is what normally happens. 12 months before a midterm election, 12 months after. I don't know if it's going to look this strong or if it's going to be a smaller rally, but the odds are really good that you are going to have a rally after the midterms. And from where I see it, that's how things are shaping up at this moment. So, look, I don't really care what happens in the next four weeks. My portfolio, my financial future is not hinged on what happens in the next four weeks. Stocks go up, great. Stocks fall, great. Who cares? If stocks fall, I'm going to do a lot of buying, right? Of of course. But if stocks fall, I'm not going to do anything. I'm not going to panic and sell. So, that's kind of the way that I'm going about this market right now with a clear understanding that I know enough to know that I don't know what's going to happen. The Iran war could end in two hours or we could sanction China in two days and head into a 20% crash. Both of those could happen. the risks have risen on both sides. So, you don't want to be making high conviction and bets right now like especially with options or leverage or things like this when you just have no way of knowing of what's going to happen. Now, I don't think the Fed is going to be hiking rates all else equal. So, if nothing changes with Iran or sanctions or any of that, I don't think the Fed is going to be hiking rates. I think the jobs report is going to be weak. I think inflation is probably going to come in better than expected, but you know, you're not going to go to a zero percent chance of a hike. It's probably going to be 5050 heading into the Fed meeting. Like, you're at 66% chance of a hike right now. Even if this falls down to like 45 or 50%. It's going to be a coin toss and markets are potentially going to be nervous about that. After the Fed meeting, once we realize the Fed's not going to hike, I would expect stocks to rally. I agree with Tom Lee on that. I'm I've actually I haven't been in the September correction camp at all. I believe the NASDAQ had its 11 12% correction from June through late July. You don't have to have another massive correction. I've I've talked about this many times on the channel now, but it's possible. It's also possible we skyrocket. Okay, very weird environment. And again, look, I want to take full advantage of any downside that we get in the markets during the month of September because I think it's going to pay off quite well after the midterms once we go through that post midterm rally. Now, again, if you guys want to come join the trading community alongside of us, I will never tell you what to buy, what to sell, what to do in your portfolio. I'm going to share stocks that I like, why I like them, the fundamentals around them, where I see them going over the next one, two, three years, and that's it. Okay. Um, I beat Wall Street to the opportunity. I take advantage of emotions in the market. When Wall Street panics, I figure out if that panic is justified or not. If it's not justified, well, how big of an opportunity is it? When I see stocks selling off on really little bad news at all, not really bad at all, and Wall Street's panicking and this XYZ company has a bright future, they're benefiting from AI, they're in the right place at the right time. Nine times out of 10, I'm going to take that side of the trade, especially if they're trading at like 15 times price to, you know, price to earnings or a PEG ratio well below one. you know, you see how we're doing that. So, that link is down below if you guys would like to come join us. I just gave you the long story short version of what we do over there. Um, link is down below in the description of today's episode. But that is going to do it for this video. You know, if I were to make a prediction right now, we're not going to have a correction in September. Stocks are going to do well in September. Stocks are going to do okay in October. Stocks are going to take off after November. But I'd be lying to you if I knew what was going to happen. Stocks might crash in September. They might, hell, they might crash in October. You know, if the Fed hikes rates, they tend to hike three to four times. You don't tend to get one and done. Okay. I don't know. The next two weeks are going to tell us a lot on that front. So, let me know your thoughts on all of this down below in the comment section. Kind of curious to see how you guys feel about all of this. Again, hit the like button, subscribe to the channel, check the link out down below in the description of today's episode, all of that good stuff. But most importantly, have a great rest of your day and I will see you in the next